Retirement Money Makeovers

How does working affect my benefits?

In many cases, working reduces the benefits you collect. If you decide to start collecting benefits when you’re not yet retired, or continue to work part-time after retirement, the government will cut your payouts according to a formula based on how much you earn.

Specifically, if you start receiving your Social Security payouts early, but you’re still working and earning more than $15,480 (the annual limit for 2014), your benefit is reduced by $1 for every $2 above that limit. However, Social Security will make an adjustment when you reach full retirement age to reflect the additional income you earned.

In the last year before reaching your full retirement age, the earnings limit rises to $41,400, and your benefits are reduced $1 for every $3 above that limit.

As of the month you reach full retirement age, your benefits are not affected by any earnings limits.